When You Include Discouraged Workers and Unemployed Workers in Calculations

question 17

Multiple Choice

When you include discouraged workers and unemployed workers in calculations of the unemployment rate

• A) this alternate measure is much lower than the official unemployment rate.
• B) the difference between this alternate measure and the official unemployment rate increases significantly during economic expansions.
• C) this alternate measure is the same as the official unemployment rate.
• D) this alternate measure is much higher than the official unemployment rate.
• E) this alternate measure is not useful in studying the macroeconomy.

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Definitions:

Lemons

In economic terms, refers to the problem of asymmetric information regarding the quality of products, especially used goods that are subpar or defective.

Peaches

Refers to the sweet, juicy fruit from the Prunus persica tree, often consumed fresh, canned, or used in culinary preparations.

Adverse Selection

A phenomenon in markets where buyers or sellers have information that one party to a transaction does not have, leading to an inefficient allocation of resources.

Adverse Selection

Adverse selection refers to a situation where buyers and sellers have different information, leading to transactions where the buyer or seller is at a disadvantage.